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WASHINGTON (AP) The U.S. government posted a narrower budget deficit in August compared with a year ago, keeping the annual gap on track to be the smallest in five years.

The deficit for August was $147.9 billion, the Treasury reported Friday. That brought the annual budget gap through the first 11 months to $755 billion, or 35 percent lower than the nearly $1.2 trillion in red ink for the same period last year.

The budget year ends on Sept. 30. The Congressional Budget Office projects the government will run a surplus this month, lowering the annual deficit to $642 billion. That would be the first annual deficit below $1 trillion in five years.

Steady economic growth has put more people back to work and boosted corporate profits. And Social Security taxes rose at the beginning of the year, along with income tax rates on wealthier Americans. Both trends have raised tax revenue. In August, the government collected $185 billion in taxes, up 4 percent from the same month a year earlier.

At the same time, steep government spending cuts that took effect in March have lowered spending. The government spent $333 billion in August, down 10 percent from a year earlier.

The federal deficit represents the annual difference between the government's spending and the tax revenues it takes in. Each deficit contributes to the national debt, currently $16.7 trillion.

The narrower deficit hasn't made it easier for Congress to reach agreement on future spending and taxes. Lawmakers need to reach agreement soon on how to fund the government past Oct. 1. Conservative House Republicans have signaled a willingness to force a partial government shutdown as a way of defunding Obama's universal health care law, which they oppose.

The House Republican leadership on Wednesday was forced to postpone a vote on a bill that would have avoided a shutdown, after tea party conservatives objected.

And another showdown could occur over the government's borrowing limit, which will likely be reached by mid-October. Failure to raise the limit would leave the government unable to pay all its bills and obligations.